Do you need insurance?
There are three main types of insurance you’ll come across when buying your first home. Here is a brief overview:
1. Lender’s Mortgage Insurance
LMI is a type of insurance that most lenders require unless you can put down a deposit of 20% or more. It varies according to the size of the loan, and protects the lender from home owners defaulting on their payments. It is usually charged as a one off premium and calculated on a sliding scale.
2. Mortgage Protection Insurance
MPI is a type of insurance you take out to cover your home loan. It’s not mandatory, but it’s a very good idea to have it. It takes care of some or all your mortgage payments if you get injured, become too ill to work, or even die. Costs will vary according to the extent of the cover you get.
3. Home and Contents Insurance
This insurance covers your new home and the belongings you keep inside it. It covers your property from physical damage, such as fire or flood, or loss caused by burglary. Lenders will require your property to be protected, because they have a vested interest in it.
